The Centre told the top court that the plea should be referred to a high court given the "pressure" of pendency of cases on the apex court.
A bench of Justices A K Sikri and Ashok Bhushan rejected the submission of the Centre and said that since the pleadings have been in the matter, it would not be appropriate to refer the matter to a high court.
"Let the matter be listed on a non-miscellaneous day for final hearing," it said.
"The Supreme Court has a huge pressure of pending cases. This petition can be referred to a high court and the apex court will have the benefit of the judgement rendered by it," he said.
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The bench said now that the pleadings are complete in the matter, it will not be appropriate to send the matter to a high court.
"Had it been the initial stage of the petition then we could have been thought of referring the matter to a high court," it said.
The bench said, "Even the high courts have much pressure of pending cases. This petition can also go to one high court only."
The counsel for Palekar opposed the Centre's submission and said that the case is at an advance stage and should not be referred to a high court.
"We will hear the matter," the bench said and adjourned the hearing.
On April 17 last year, the apex court had issued notices to the Ministry of Information and Broadcasting and Central Board of Film Certification (CBFC) and sought their reply to Palekar's plea.
The 73-year-old actor has sought relaxation in the censorship of films by removal of pre-censorship of movies.
"The petitioner is challenging the provisions of the Cinematograph Act, 1952 and the Cinematograph(Certification) Rules, 1983 which in turn imposes pre-censorship on the freedom of speech and expression of the artistes as well as the audience...
"The petitioner is aggrieved by the provisions granting the power of ordering cuts, deletions, alterations in a film along with the abuse of power while exercising the powers given by the said Act and Rules while certifying and/or denying certification to any applicant film," his plea said.
"The rules have to change as the Internet and social media dominate...When content on television and Internet is free of censorship, the same content being altered, cut or deleted before being shown in a cinema hall is an attack on our right to equality," the petition said.
Palekar also referred to the change in the social fabric since a 1970 apex court order by which it has been held that censorship in movies was valid and necessary because cinema is the most influential media of mass communication.
"Absence of a member with a legal background in the CBFC often leads the board to repeatedly violate filmmakers' fundamental right to speech and expression," Palekar added.